BIR Non-Ferrous World Mirror August 2013

Global – The following article is based on the latest Non-Ferrous Metals World Mirror produced by the BIR world recycling organisation for the benefit of its members.

At present, India ‘seems more like a breakdown economy’ than the much-heralded ‘breakout economy’ – and its recent decline is having a significant impact on metals recycling both at home and abroad, according to the BIR’s latest Non-Ferrous Metals World Mirror. ‘Indian secondary metal production is propelled by imported scrap as its raw material feed,’ it is stated. ‘With the rupee proving uncontrollable against the US dollar, imports have become alien. Also, factory outputs have been downsized to match new consumption levels – which has reduced material intake.’

One of the regions to be adversely affected by these developments is the Middle East where aluminium and lead scrap prices have failed to reflect LME gains because of the lack of strong demand from key customers in India.

There is also a worrying development to report in South Africa where the Department of Trade and Industry has signalled its intention to introduce new rules on scrap exports from September 16. In effect, local consumers will be able to buy at ‘20% below international prices for the various grades’. The country’s Metal Recycling Association is planning a legal challenge to this proposal, arguing that it runs counter to free trade. Meanwhile, consumers are said to be finding difficulty in purchasing scrap because ‘the market is volatile and the Rand very weak’.

Staying in the southern hemisphere, market feedback from Australasia highlights multiple yard closures and several scrap companies entering voluntary receivership in recent weeks against a backdrop of fierce competition for the reduced volumes available. Although higher LME quotations have encouraged more material into the system of late, some industry experts are predicting further yard closures over the coming months.

Non-ferrous scrap is described as ‘very tight’ in Brazil and ‘not abundant’ in Mexico despite the recent rebound in LME values. That said, a combination of the summer season and the economic slowdown both at home and in other emerging markets has led to a reduction in consumers’ appetite for scrap in Mexico.

In other news, it is reported that the Mexican government is likely to come forward with a tax reform proposal by late September or early October which could well have a significant impact on the trade. On a similar theme, the metallurgical industry lobby in Russia is calling for the removal of import VAT for scrap metals.

In the USA, non-ferrous scrap volumes continue to be the issue ‘and are hampering attempts to work to higher margins as too many are trying to source the same scrap’. Aluminium scrap supply is also termed ‘tight’ in Japan. Meanwhile, China has reported substantial declines in its imports of aluminium and copper scrap during the first seven months of 2013: the former dropped 8.4% year on year to 1.34 million tons while the latter slid 9% to 2.41 million tons.

There is good demand from smelters for copper scrap but some works are struggling to source enough material to cover their needs, it is reported from France. Similarly, consumers of lead and lead batteries are finding that there is ‘not a lot of material around’ and stocks are very low. Interest in stainless steel, by contrast, is minimal and substantial stocks have accumulated in scrap yards.

Over recent weeks in Germany, scrap prices have increased slightly in response to LME gains but supply has shown only a minor improvement. Business volumes have declined by 20-30% for many companies since the beginning of the year, with larger firms in particular suffering the effects of high costs of finance and labour.

Meanwhile, there has been little new to report from Italy where almost all scrap dealers have been closed for the summer holidays, with some not reopening until the first week in September.

Looking ahead, overall demand for scrap and other commodities in the Nordic Countries is expected to strengthen this autumn with improving market sentiment.